The Benefits and Pitfalls
For the home or business owners or tenants the main benefits are to have warmer, more comfortable buildings, while paying the same (or lower) energy bills, with no upfront cost. For landlords it is to improve their buildings with no upfront cost.
An additional benefit is lower carbon emissions, and this is the main driver for government in developing this scheme. It also wants to improve energy security, mitigate fuel poverty, increase productivity and reduce the costs of meeting the UK’s renewable energy target.
Are there any pitfalls?
The golden rule is based on average energy use. If you currently use less than the average amount of energy, the savings on your energy bills may be less than estimated in the assessment. It is possible that they will not cover the cost of the repayments, and you will end up with higher bills.
If you currently keep the thermostat low to keep bills down, then installing energy efficiency measures means that you will be able to heat it to the current temperature for less. The temptation then is to turn the thermostat up, and get more comfort for the same amount of money – called Heat Take-Back. This means that, when the repayments are taken into account, your overall spend will have increased. It may however be possible to take a bit more heat with a bit less saving
Are there any safeguards against paying more?
If a lower than average user wishes to take out Green Deal finance, the Green Deal Provider must obtain a written acknowledgement that they are aware that, based on their energy use, the Green Deal charge may not be fully offset by their energy savings. This covers the first scenario above, but not the second.
What happens if I move?
The premise that the people benefiting from the installation of Green Deal measures should be the ones who pay is at the heart of the scheme. This means that when you sell or rent out a property with a Green Deal charge in place, the new owners or tenants take on the repayments via their energy bill. It remains to be seen how potential buyers and tenants will view the Green Deal charge. If you clear the charge by repayment before the scheduled term, some Green Deal Providers may require an early repayment charge.
As current owner or landlord, you must disclose that there is a Green Deal charge attached to the property via an EPC, and get written acknowledgement from the buyer or tenant that they are aware of the charge and understand that they are liable to pay the charge. If disclosure is disputed the new bill payer has just 90 days after receiving their first electricity bill at the property to complain. After that they will have no recourse and will be liable to pay the Green Deal charge.